Ambrose Evans-Pritchard

Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London. Subscribe to the City Briefing e-mail.

The revelations about EMU skulduggery are coming thick and fast. Tim Geithner recounts in his book Stress Test: Reflections on Financial Crises just how far the EU elites are willing to go to save the euro, even if it means toppling elected leaders and eviscerating Europe’s sovereign parliaments.

The former US Treasury Secretary says that EU officials approached him in the white heat of the EMU crisis in November 2011 with a plan to overthrow Silvio Berlusconi, Italy’s elected leader.

"They wanted us to refuse to back IMF loans to Italy as long as he refused to go," he writes.

Geithner told them this was unthinkable. The US could not misuse the machinery of the IMF to settle political disputes in this way. "We can't have his blood on our hands".

So now we know what China’s biggest property developer really thinks about the Chinese housing boom.

A leaked recording of dinner speech by Vanke Group’s vice-chairman Mao Daqing more or less confirms what the bears have been saying for months. It is a dangerous bubble, and already deflating.

Prices in Beijing and Shanghai have reached the same extremes seen in Tokyo just before the Nikkei boom turned to bust, when the (quite small) Imperial Palace grounds were in theory worth more than California, and the British Embassy grounds (legacy of a good bet in the 19th Century) were worth as much as Wales.

Li Junheng from JL Warren Capital has translated his comments, which I pass on for readers.

“In 1990, Tokyo’s total land value accounts for 63.3pc of US GDP, while Hong Kong reached 66.3pc in 1997. Now, the total land value in Beijing is 61.6pc of US GDP, a dangerous level,” said… Read More

We are in a colossal bubble once again. It is worse than 2008 on many indicators, though the epicentre of risk is ever more concentrated in sovereign debt, especially the debt of those countries without a central bank (you all know who I mean).

Today’s chart from Andrew Lapthorne as Societe Generale is remarkable. It tracks the nominal yield on a classic mix of different assets held by funds. The return on SG’s Quality Index is close to an all-time low of 2.4pc (though this of course pick up pre-deflation fears, as well as speculative mania).

He says there has been a rotation out of momentum stocks – ie, the US tech sector – and into value stocks and those with high dividend yield. That is not as comforting as it sounds.

“Is this yield and value-orientated positioning reflecting a… Read More

Be careful if you are planning to buy a house in France. The EU stress test for banks released this morning expects French property to fall 1.6pc this year and another 1pc in 2015 even if things go well.

The “adverse scenario” is a cumulative drop of 31pc by the end of 2016. This reflects the worries of French regulators who fed the data to the European Banking Authority. Romania competes for horror.

Italians deem their country less volatile. Property prices fall 3.4pc this year and 0.7pc next if all goes well, but only drop 16pc in a rout by 2016.

Spain falls 4.3pc this year, then starts to recover. The worst case is a 10.4pc drop over the next two years with rebound by 2016 even in a crisis. The Spanish regulators are delightfully optimistic as usual, seemingly living in a parallel universe.

The Chinese Yuan weakened yet again this morning, punching through the key line of 6.25 against the dollar. It is almost back to where it was two years ago. This is the biggest story in the global currency markets.

Yuan devaluation has reached 3.1pc this year. The longer this goes on, the harder it is to accept Beijing’s story that it is one-off measure to teach speculators a lesson and curb hot money inflows.

Source: Bloomberg

The US Treasury clearly suspects that the Chinese authorities have reverted to their mercantilist tricks, driving down the exchange rate to keep struggling exporters afloat. Officials briefed journalists in Washington two weeks ago in very belligerent language.

Here is an excellent breakdown of the hawk-dove spectrum on Russia sanctions from Open Europe, as we wait to learn from Geneva whether Vladimir Putin wishes to do anything to stop events spinning out of control.

As you can see, there is no clear link between dovish views and vulnerability to economic fallout from a financial/trade/gas showdown. The Poles, Lithuanians, and Latvians are all uber-hawkish even though they have very high trade links. Lithuania has exposure equal to 32pc of GDP.

Obviously this is about national identity and security, the legacy of occupation under the Tsars and then the Bolsheviks (a Great Russian empire masked by ideology, after the era of European empires was already past its sell-by-date).

Britain is marginal to the great debate on Europe. France is the linchpin, fast becoming a cauldron of Eurosceptic/Poujadist views on the Right, anti-EMU reflationary Keynesian views on the Left, mixed with soul-searching over the wisdom of monetary union across the French establishment.

Marine Le Pen’s Front National leads the latest IFOP poll for the European elections next month at 24pc. Her platform calls for immediate steps to ditch the euro and restore the franc (“franc des Anglais” in origin, rid of the English oppressors), and to hold a referendum on withdrawal from the EU.

The Gaullistes are at 22.5pc. The great centre-Right party of post-War French politics is failing dismally to capitalise on the collapse in support for President François Hollande.

The Parti Socialiste is trailing at 20.5pc. The Leftist Front de Gauche is at 8.5pc and they are not exactly friends of Brussels.

Greece’s triumphant sale of five-year bonds to hedge funds (1/3) and global in investors – half based in London – tells us a great deal about the mental and emotional state of investors.

It tells us very little about the state of the Greek economy or Greek society. It is certainly not evidence that Greece is safely out of the woods. It is even less a vindication of EU/IMF Troika policies, an epic failure that will be studied years hence by scholars.

Normally when a country emerges from the trauma of an IMF austerity regime it has at least a tolerable level of debt, and if need be a devalued currency to restore competitiveness. Tough reforms matched by condign relief. The country is put on a viable path towards recovery.

Revanchist nationalists of different stripes have just won 65pc of the vote in post-democratic Hungary. The mystical Jew-baiting Jobbik party increased its share to 20pc, so no doubt we will see more of its Magyar Garda rallies and Arrow Cross nostalgia.

The Fidesz ruling party – and serial violator – has a seemingly unbreakable grip over the governing machinery of a mid-sized EU state in the heart of central Europe. It has harassed the media (I mean seriously, not like Leveson), purged the judiciary, and muzzled the opposition… Read More